USD/CAD Price Forecast: Could surpass 1.3900 as break above 38.2% Fibo. comes into play

The USD/CAD pair has shown promising recovery, climbing from the 1.3730 level, which marked a three-month low. Over the past two days, the price has remained resilient, trading near 1.3865, representing a 0.15% gain for the day. US Dollar (USD) appreciation benefits from concerns over inflation due to volatile energy prices and geopolitical tensions between the US and Iran, factors that typically bolster the US Greenback.

Meanwhile, a dip in crude oil prices and escalating trade tensions between the US and Canada may be positively impacting the Canadian Dollar, further supporting the USD/CAD pair.

From a technical standpoint, the pair could see bullish momentum if it surpasses the 23.6% Fibonacci retracement level of the June-August decline. Additionally, optimistic momentum indicators, including the Relative Strength Index (14) near 62 and Positive MACD readings, suggest that sellers are attempting to stabilize the USD/CAD pair and continue its recovery from a multi-month low.

However, should the price continue its ascent, it may face resistance at 1.3900, located just below the 1.3925-1.3930 confluence, which includes the 100-period Simple Moving Average (SMA) on the 4-hour chart and the crucial 38.2% Fibonacci level. Further upward momentum would then need to overcome supply around the 50.0% Fibonacci level at 1.3988 and the 61.8% retracement at 1.4049.

Conversely, the pair's downside risk is positioned at the 23.6% Fibonacci retracement at 1.3852, with a deeper support level emerging at the Fibonacci anchor near 1.3731 if the selling pressure intensifies.